'Omnibus I – Simplification or Deregulation? A Critical Analysis and Recommendations from Practice'

Executive summary

...This article draws on our experience as practitioners working with companies to implement human rights and environmental due diligence (HREDD). It shows how the Omnibus proposal would disrupt company due diligence practices, undermine climate credibility, and create inefficiencies across the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD)...

Key concerns and recommendations include:

The weakening of the risk-based approach by introducing requirements focused primarily on tier-1 [in the Commission and Council proposals] would shift efforts away from where they matter most. Thus introducing compliance burdens, without creating value for business.

• Recommendation: Strengthen and clarify the risk-based approach by providing practical, coherent guidance...

The focus on tier-1 relationships risks disproportionately burdening European SMEs, and restrictions on the information in-scope companies can request from SMEs may lead to their exclusion, as buyers struggle to obtain sufficient data.

• Recommendation: Implement tailored, risk-based, and sector-specific approaches that prioritize capacity-building and joint solutions for SMEs...

Mandated cascading of due diligence obligations to all suppliers can push disproportionate responsibilities onto SMEs, encouraging box-ticking rather than meaningful risk management.

• Recommendation: Require companies to use cascading on a risk-based basis and in a way that doesn’t shift risk unfairly, giving companies the flexibility to tailor their approach...

The removal of uniform liability rules undermines legal clarity and increases litigation risk through conflicting national regimes.

• Recommendation: Retain a uniform civil liability standard to ensure legal certainty and create a level playing field for all companies.

Climate transition plans need enforceable obligations to be effective...

• Recommendation: Reinstate the obligation to implement climate transition plans to ensure credibility and effectiveness, and retain reference to the Paris agreement and 1.5 degrees target.

Digital tools, AI, and assurance processes [may] support – not replace – judgement, prioritisation, and stakeholder engagement.

• Recommendation: Invest in the development of common, open-access digital tools and AI solutions aligned with international standards and risk-based approaches, and provide clear guidance on their appropriate use as supportive, not primary, mechanisms for due diligence.

Treating reporting as a separate process rather than as an outcome of due diligence creates duplication and unnecessary administrative burdens.

• Recommendation: Provide guidance on how the CSDDD and CSRD can be carried out as a single, integrated process...

This article concludes that simplification is best achieved through smarter regulation: coherent, risk-based, and aligned with business realities — not deregulation. Consistent guidance and shared tools are the real keys to reducing cost, increasing impact and strengthening EU competitiveness.

A Step Backward in the Name of Simplification

With its Omnibus proposal, the European Commission has opened Pandora’s box. Rather than simplifying sustainability legislation, the proposed amendments would deregulate it. The Commission’s proposal — alongside the Council’s position and the draft report by Rapporteur Warborn — will  undermine legal certainty and move away from international standards...